A total of USD1.3 billion is to be raised by various financing parties to enable Grupo Aeroméxico to exit US Chapter 11 bankruptcy protection, according to a motion and notice of revised equity and debt commitment letters filed with the US Bankruptcy Court in the Southern District of New York.
According to this, the committed parties — excluding strategic partner Delta Air Lines (DL, Atlanta Hartsfield Jackson) and Mexican investors — will purchase or finance USD600 million in new capital (representing 26.9% of all new shares issued), as well as USD762.5 million in senior secured first-lien notes.
This follows an agreement on the terms of a revised equity commitment letter and a revised debt commitment letter reached between the so-called “exit financing parties” consisting of Grupo Aeroméxico, its lead US lender Apollo Global Management Inc, Delta Air Lines, groups of senior shareholders, unsecured creditors, and Mexican investors.
Certain of the committed parties (other than Delta and the Mexican investors) and/or other third-party investors may also provide other exit debt financing through syndication to be arranged by JP Morgan Chase Bank.
Highlights of the revised equity commitment letter include:
- Delta will subscribe and pay for USD100 million of new shares. It will also be required to convert all fully accrued amounts of its Tranche 2 loans into new shares at plan equity value. In exchange, Delta shall receive 20% of all new shares issued under the Chapter 11 exit plan, representing 20% of the capital stock of the reorganised Grupo Aeroméxico. In addition, any or all portions of Delta’s claims against the debtors shall be allowed and satisfied in accordance with the Chapter 11 plan and any distributions of new shares on such claims will be added to Delta’s ownership interest.
- Apollo Management Holdings will receive USD150 million in cash, accrued interest at the applicable interest rate under the Debtor-in-Possession (DIP) credit agreement on the outstanding obligations under the Tranche 2 DIP loans commencing on December 31, 2021; and 22.38% of all new shares.
- Mexican Pension Fund Tranche 2 DIP loans will be converted into 3.54% of all new shares issued under the Chapter 11 exit plan.
- A cash pool of USD450 million (consisting of USD350 million from the debtors’ balance sheet and USD100 million of excess cash) shall be distributed to unsecured creditors.
Highlights of the revised debt commitment letter include:
- Senior secured first lien notes of USD762.5 million are to be issued collectively.
- Of this, USD575 million will be used to repay Tranche 1 of the DIP facility; for working capital and general corporate purposes; payments to holders of first-lien notes and administrative fees; and to fund cash distributions to unsecured creditors.
In the motion, Grupo Aeroméxico said the revised exit financing proposals provided for sufficient exit financing for a successful emergence from Chapter 11 and also resolved several other complex matters with broad stakeholder support which would allow the debtors to continue towards a more consensual and expeditious confirmation of the restructuring plan. “Put simply, this is the only viable path forward for the debtors,” it said.